Ground Rents Income Fund
plc
RESIDENTIAL LEASEHOLD REFORM
UPDATE
Ground Rents Income Fund plc (the
'Company') notes the enactment of the Leasehold and Freehold Reform
Act 2024 (the 'Act') on 24 May 2024. The Act forms part of
the Government's residential leasehold reform agenda, launched in
2017, and was the final piece of relevant legislation passed by
Parliament ahead of the General Election on 4 July
2024.
The Act follows the Government's
consultation (the 'Consultation') in November 2023 seeking views on
restricting the level of existing residential ground rent that
leaseholders pay in England and Wales, which included the
Government's stated intention not to pay compensation to
freeholders. This Consultation represented a significant
shift in the Government's approach to leasehold reform and led to a
pause in market activity and negatively impacted values. The
Company subsequently worked with industry peers and advisers to
prepare a comprehensive response to this Consultation that was
submitted in line with the Consultation timetable on 17 January
2024.
Following submissions to the
Consultation by industry and others, to which the Government is yet
to respond, the Act does not impose restrictions on ground rent
payable under existing residential leases. Consequently,
leaseholders must continue to pay ground rent in accordance with
their lease terms.
Although this represents a better
outcome for the Company than contemplated in the Consultation, the
Act contains provisions that are relevant to the Company,
including:
· Making
it easier and cheaper for leaseholders to buy out their ground
rent, extend their lease or acquire their freehold, a process known
as 'enfranchisement'
· Improving transparency over service charge and insurance costs
for leaseholders
· Making
it easier and cheaper for leaseholders to assume management of
their building
The majority of the Act, including
the key provisions outlined above, will only come into force once
the Secretary of State passes additional secondary legislation.
Uncertainty therefore remains about how and when the legislation
will come into force, as well as whether any future Government will
continue to advance residential leasehold reform in whole, or in
part or at all.
The Company and its external
advisers are working to better understand the detail of the new
legislation and its potential impact on the portfolio. As
previously communicated to investors, the Company has a clear
strategy to address the headwinds arising from leasehold reform and
building safety, whilst demonstrating best-in-class residential
asset management. Against this challenging backdrop, the
Company, alongside other institutional owners, continues to
advocate for leasehold reform that fairly balances the legitimate
interests of responsible landlords with the interests of
leaseholders, whilst also delivering industry wide improvements in
terms of transparency, value for money and service
levels.
Due to this ongoing work, Companies
House and The International Stock Exchange Authority Limited have
approved a further extension to the Company's 30 September 2023
accounts filing date to 30 September 2024. The Company does
however expect to issue its accounts before 30 June 2024, and hold
a separate Extraordinary General Meeting in advance of 30 September
2024, at which the Accounts will be presented to shareholders and
shareholder resolutions relating to the Accounts will be
proposed.
For
further information:
Schroder Real Estate Investment
Management Limited
Nick Montgomery / Chris Leek /
Matthew Riley
|
020 7658 6000
|
Singer Capital Markets (Broker)
James Maxwell / Alaina
Wong
|
020 7496 3000
|
Appleby Securities (Channel Islands) Limited
(Sponsor)
Michael Davies
|
01534 888 777
|
FTI
Consulting
Richard Gotla / Dido Laurimore
/ Oliver Parsons
|
020 3727 1000
|
Notes to editors:
Ground Rents Income Fund plc (the
'Company') is a closed-ended real estate investment trust ('REIT'),
listed on The International Stock Exchange ('TISE') and traded on
the SETSqx platform of the London Stock Exchange.
Schroder Real Estate Investment
Management Limited (the 'Manager') was appointed as the Company's
Alternative Investment Fund Manager in May 2019 to support the
Company's Board with the headwinds related to building safety
reform and leasehold reform.
During the first half of 2023 the
Board and Manager carried out an extensive shareholder consultation
on proposals to change the Continuation Vote mechanism included in
the Articles dating from 2012, as well as proposed changes to the
Investment Policy. These proposals received strong support
from shareholders and resulted in a new Continuation Resolution and
Investment Policy. The new Investment Policy adopts a
strategy of realising the Company's assets in a controlled, orderly
and timely manner for shareholders, whilst continuing to deliver
best-in-class residential asset management including fairness,
transparency, and affordability for leaseholders.
Please see the Company's website for
more information: www.groundrentsincomefund.com